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tv   Nightly Business Report  PBS  February 20, 2014 1:00am-1:31am PST

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- >> the street.com. founded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr. global hot spots. ukraine, venezuela, thailand. anti-government protests in three countries on three continents. so far pictures like these haven't rattled global investors much, but that could change. we've got portfolio advice for you. the great way to debate. do some members of the federal reserve want to start raising interest rates sooner rather than later? we have the minutes of the central bank's last meeting.
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energy spike. it's not just the brutally cold winter sending the price of natural gas to five-year highs. it's the supply. what happened to that glut of gas and how high will prices climb? all that and more tonight on "nightly business report" for wednesday, february 19th. good evening, everyone. topping our news tonight, violent revolutionary protests erupting around the globe. anti-government dem on strarts have taken to the streets in ukraine, venezuela and thailand. investors everywhere are closely watching those deadly clashes and hoping things will stabilize, especially as european officials meet tomorrow for an emergency session in brussels. now, the biggest hot spot, kiev, ukraine. there's no letup to the violence and the death toll in that city's independence square as protesters who want closer ties to europe and the u.s. but clash with others who want to be aligned with russian-backed government. in washington today, president obama warned kiev of consequences over the escalating violence there, saying the military should not engage in a
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situation that can be resolved by civilians. >> the united states condemns in strongest terms the violence that's taking place there. we have been deeply engaged with our european partners as well as both the ukrainian government and the opposition to try to assure that that violence ends. >> that tough talk may have worked. late today a truce was declared between the two sides in the ukraine, calling for the beginning of negotiations aimed at ending the bloodshed. no signs of peace in bangkok. protesters there battled riot police as they tried to oust thailand's prime minister amid accusations of corruption. in venezuela, a sea of white as tens of thousands marched against the government, angry about the killing of protesters last week and the arrest of the harvard-educated opposition leader, leopolodo lopez. government supporters were also marching, calling the protesters traitors. one american company says
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that political and economic turmoil in venezuela will cost it. colgate palmolive warned it could book one-time losses up to $200 million or 19 to 20 cents a share because of currency moves that the caracas government put in place. colgate finished the day lower, p and grksz clo& g closed highe a warning today to all the emerging markets from the national monetary fund. it said developing nations, indra ainld india and particular in particular need to make economic changes to stave off inflation and the even greater threat of deflation in europe. joining us now to talk more about what the political and economic unrest might mean for markets large and small around the globe is david kelly. he's chief global strategist at jp morgan funds. david, how much if at all do i need to be worried about what i'm seeing in the ukraine,
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thailand and venezuela? >> i don't think investors should overreact to this. there are specific political issues in each of the countries which are are all quite different. i don't think they really speak to a systematic problein emerging markets. if you look at turkey and india, i know the imf say they need to tighten monetary policy. they have been. in fact we've been seeing stabilization in the last few weeks. i think that the biggest mistake investors could make here is overreacting to these events and staying out of emerging markets which i still think are very good long-term investments. >> right now it seems like okay to you. but could it possibly develop into a much more volatile situation, in which case what is the contagion risk. >> that's why the fact that there are more political issues than economic ones are so important. this is not because they've got so much debt in most cases, it's really because of political disagreements in thailand and ukraine and very irresponsible economic policy also in
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venezuela. but it doesn't sound like a global crisis. last year the u.s. market went up by 32%, emerging markets down by 2%. over the course of the year we've devalued emerging stocks by 13% to u.s. stocks in lodge run did things change that much? it's left emerging market stocks looking very cheap by most metrics. long term investors should think about that area. >> so you say buy? >> absolutely. buy for the long run. i don't think you should invest in the short run. i think the long run there's a lot of opportunities in emerging markets, but don't just pick a country and also do it with a good investor who knows how to miss some of the potholes. >> buy a fund, by an etf and play the demographic play which favors the emerging markets? >> i think a fund more than an etf. an etf is going to be forced to mirror some indexes which in some cases are dominated by
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commodity companies or state-owned companies in some emerging markets. a good well-managed fund should do well in the long run. >> let's bring it back home here. there have been a lot of concerns about what's going on with the u.s. economy, also concerns about today some of these minutes that came out of the federal reserve. how is the u.s. economy doing? it seems like all the data we've been getting recently has been tainted by the bad weather. is that something temporary, or is there something more long term going on here? >> i hope the weather is temporary. we're building an igloo in our backyard right now. when the weather lets up i think the economic statistics will get better. as we look at them there does seem to be a little more than weather in the last few months. we're not seeing enough per can i -- perkiness in the housing numbers. still i think things will pick up after the weather clears here. and most importantly, i think growth will be strong enough to keep the unemployment rate coming down, to keep interest rates moving up, to allow
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earnings to rise somewhat. so i still think it means rates will be higher this year and probably u.s. equity prices also higher. still time to be a little overweighted equities versus fixed income in the united states. >> common sense from david kelly, chief global strategist at jp morgan funds. on wall street today, stocks sold off in the final hour as investors got spooked after the release of the minutes from the federal reserve's last policy meeting. comments from policymakers revealed little consensus on the direction of interest rates and doubts on the fed's timetable for tapering its stimulus the dow lost nearly 90 points, na in a row of gains and s & p down 12 points in bond market the fed fears sent treasury prices lower and yields slightly higher. yields rose to 2.74. steve liesman has more on the fed minutes and what's next for the nation's central bank under new chair janet yellen. >> reporter: the federal reserve
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gave a hint today what would stop them reducing the amount of bond purchases. in the minutes for the january meetings released today, a number of the members said they would only stop tapering quote if the economy deviated substantiaially from its expect path. and that's for stronger growth in the year ahead. and that's similar to new fed chair janet yellen's recent comments before congress that it would take a notable change in the forecast i asked san francisco fed chair. >> it would be high changing the pace of the step downs of the purchases we started in december. i think the economy has improved quite a bit. we again want to take this medium term look in unemployment down to 6.5%. >> reporter: the fed minutes show that the central bankers discussed the weather and said the weak december jobs report was likely the result of inclement weather. meanwhile, the fed had a robust debate about how to communicate
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its intentions to keep rates low for a long time. the fed had said it could consider hiking rates once the unemployment rate fell to 6.5%. but it's already fallen to 6.6, and the fed doesn't seem ready to move. there's also considerable concern about low inflation rates with some officials suggesting that if it doesn't move up sometime soon, the fed might consider halting the taper. that was the doves on the committee. the hawks on the committee, they fired a shot of their own with some saying they could see raising interest rates even before the middle of the year. but that right now is not the consensus of the committee. for "nightly business report," i'm steve liesman. disappointing housing data in january did not help the market's tone today. construction on new homes recorded their biggest drop in nearly three years in january, tumbling 16% with builders putting the blame on harsh winter weather and the number of permits filed for future construction also fell last month. that was the third month that row for that. also moving higher, the
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price of oil. crude oil closed above $103 a barrel today, the most in more than four months. fuelling the price hike, forecasts for more cold weather which boosted demand for home heating oil. it's not just crude prices that have been moving higher. natural gas prices hit a five-year high today, up a staggering 43% so far this year. and crossing the closely watched dollar mark. jackie deangeles has more on why consumers will be paying more for nat gas. >> reporter: natural gas futures up more than 10% today crossing that critical $6 level. we haven't seen these kinds of prices since december of 2008. now, the dramatic move puzzling some traders early on because nat gas's recent swing have been weather related. but the extreme cold letting up at least for a bit. so why are prices spiking? some say it's because the damage has already been done. the polar vortex has caused nat gas to spikes which has taken supplies down several weeks in a row. >> what was considered a glut of natural gas has vanished.
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and right now we have already now logistical issues that come as far as delivering the natural gas and giving people reason for concern. >> reporter: the nature of the supply declines reported have been roughly twice what they were at the same time last year. tomorrow the department of energy will release its storage report for the week ended february 14th. meantime, the break from the cold may be brief. weather models suggesting that the rest of february and much of march could be very frigid. so what does the future hold for nat gas? some are saying not to be surprised if it reaches $7. that's because when the extreme cold finally does let up, there won't be a lot of catch up time before the severe heat starts this summer. for "nightly business report," i'm jackie deangelis reporting. coffee prices are also spiking, but for a different reason. and it could mean you'll be paying more for a cup of joe. we'll tell you why a little later in the program. rising prices, stagnant
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wages, higher mortgage rates just some of the challenges u.s. consumers are facing right now. and a lot of food and personal care productmakers are focusing on how to keep consumers happy and sales growing in this difficult environment. sara eisen has more from boca raton, florida where industry leaders met at a conference of the consumer analyst group of new york. >> reporter: they're the companies behind your everyday items, food, detergent, toothpaste and tobacco. here to talk about the industry and the challenging state of the american consumer. >> the consumer is still pretty fragile. as you said we play in a broad range of categories. if you look the our categories, add them all up, the last six months they were about up a point which is kind of what historical trends have been. if you look at the last three months they're flat. things have flattened out as retailers are discounting more to get traffic into the stores. >> reporter: executives here are downplaying the weather impact, and instead they see weak consumer spending, sluggish incomes, challenging from
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emerging markets. and they're focused on innovation, including coca-cola's new partnership with green mountain coffee to launch a brand-new category of do it yourself drinks. >> we don't know exactly how big it will be. we know that cold bempverages a four to five times the size of hot beverages. we think it's a substantial market. >> reporter: even hillshire farm behind jimmy dean sausages is looking for new product and new flavors. >> we have other businesses, or smaller businesses that have been more challenging. we have a corn dog business up called state fair that's had new competition. our philosophy there is hey let's win our way out of this through innovation and brand building as opposed to price-based competition which is really the place we'd rather not go. >> reporter: hersheys announcing a new product crunch clusters. excitement in a category that's been a less than exciting environment for consumer spending, for "nightly business
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report," i'm sara eisen. still ahead on the program, who controls the internet? regulators want to propose new rules to make sure some content isn't block. and the outcome could impact everyone who clicks and logs on. rules for so-called net neutrality got a boost by federal regulators. julia boorstin has more on the new approach. >> reporter: fcc chair tom wheeler is taking a new stab at rules to protect net neutrality. the idea that internet service providers like verizon, at&t,
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time warner cable or comcast should not selectively block or slow web traffic. the commission does not plan to appeal a court's decision on fcc's lawsuit against verizon, which effectively threw out many net neutrality rules. the fcc saying that for now it will not look to reclassify broadband as a public utility. what some analysts call the nuclear option. these would give the fcc more power. now the commission is justifying that neutrality protection with a different part of the law. >> they believe they still have sufficient authority to be able to protect against any of the potential abuses that people have been worried about over the basis of net neutrality in the first place. >> reporter: the commission is soliciting public comment on its new guidelines, focusing on transparency and making sure consumers can access all lawful content. chairman wheeler does not seem to be trying to regulate more strictly than the prior rules, a win for internet providers. this comes amid controversy about verizon fios slowing netflix streaming speeds, a part of internet service not directly
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connected to net neutrality rules. but the fcc's comment indicate intent to ensure weaker operators or potential competitors like netflix don't face discrimination. >> this probably chills the whole idea that carriers will start to charge netflix. it doesn't necessarily prohibit it. and it also doesn't prohibit charging consumers for using netflix. >> reporter: key leverage chairman wheeler is holding onto, the potential to reclassify the internet as a utility which could keep internet providers walking on eggshells to avoid triggering additional oversight. >> julia boorstin is with us now to discuss a big late-day acquisition. facebook is buying whatsapp for $16 billion. what's up? why is facebook spending so much money for a service that basically gives you free text
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messages? >> reporter: this is facebook's biggest acquisition by far. comparatively instagram cost $1 billion. whatsapp is valuable because it is the leading mobile messaging service, over 450 million people using the service every month. and the engagement is high. 70 per of those 450 million use it every single day. it's also growing incredibly fast, adding 1 million new active users every single day. so facebook is drawn to the engagement and also to the massive scale. mark zuckerberg said in a press release he expects to hit 1 billion users. facebook wants to make sure it holds onto those valuable mobile users and also those valuable teens. they see whatsapp as a potential rival. >> that is the whole name of the game in this business, everybody is trying to get a position on this very competitive landscape. so how does this position facebook better against its competitors? >> reporter: well, it really
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shows that facebook is willing to spend big money, $16 billion, to hold onto that mobile and particularly that younger user base. we're talking about teens here. whatsapp incredibly popular overseas and it also does have a business model. they do charge some of their users a dollar a year. it shows that facebook wants to be at the cutting end of the future of mobile messaging. >> fascinating development. thank you so much, julia boorstin reporting from los angeles. as julia just mentioned in her internet story, one of the service providers includes comcast. that's the parent company of cnbc which produces this program. we begin tonight's market focus with an earnings beat out of tesla after the market closed. the electric carmaker saw strong demand for its model s electric car. it delivered nearly 7,000 of them in the quarter. that's a record for the company. it expects to deliver 35,000 of those cars in 2014, i said, a more than 50% increase from just last year. shares initially spiked after the bell. the stock ended the regular session, though, down 5% to
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$193.64 the grocery retailer safeway is in talks with private equity firms be an a possible sale of the company. there is buzz that serveris capital management is exploring a deal for the grocery company. the firm also reported fourth quarter sales after the bell, but they were shy of estimates. shares initially rose on the news of that possible sale. the stock ended the regular day up 1.5% to $34.61. but you can see the jump after hours. kay jewelers a parent signet is buying smaller rival zales at a deal valued $1.4 billion in total. signet which owns jared would give the combined company a 16% share of the specialty jewelry market, and according to the ceo will give consumers more choices. >> we believe by making a transformational acquisition such as this we'll be able to
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give our customers much better in innovation by doing more research and development, and ultimately it will lead to more choices for them. >> shares of both companies surged on the news. zales up to 20.92 and signet rose 18% to $93.65. eli lily rose on the news that the company's experimental cancer drug significantly improves survival rates in lung cancer patients. the treatment which some think could be lily's next blockbuster drug has shown success in treating stomach cancer. shares rose 5% to $58.09. shares of garmin up sharply. investors snapped up the stock on news of better than expected earnings and sales. surprisingly, it wasn't the traditional gps systems that drove the navigation company's positive results, but it was stronger demand for aviation and fitness-related products. the stocks surged more than 9% to $51.55. get ready perhaps to pay more for a gallon of milk, as much as 20% more as soons a next
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month. analysts say strong global demand especially in china coupled with a drop in milk production overseas has led to a sharp increase in u.s. dairy exports, and that means higher prices here at home. well, milk is one thing, but coffee is another. the price of your morning joe is about to get a big jolt. supply concerns in brazil, this is the world's number one supplier, means java junkies could expect prices to percolate higher very soon. jane wells reports. >> reporter: blame it on rio. quote brazil is the name of the game when it comes to coffee, one broker tells dow jones. the weather has been too hot and too dry at a critical time for the coffee crop down there in the world's number within producing coffee country. coffee future is making another strong run on wednesday, up, way up, to over $1.68 a pound. this on top of the biggest jump in prices yesterday since 2004. prices have shot up this year after a nice, steady decline during most of 2013.
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now some expect coffee futures could hit $2 a pound until traders get a better idea of how the weather's going to play out. but the "wall street journal" reports 10% of the crop in brazil may not be salvageable at this point. one-third of the world's coffee comes from brazil, and 2014 has been the driest so far in three decades. as for coffee retailers, if the crop turns out to be significantly reduced, this will impact them once they start contracting in a few months, then eventual lit pris will go up and impact you or at least me. for "nightly business report," i'm jane wells in los angeles. >> the always caffeinated jane wells. when walmart reports earnings tomorrow, the new ceo will speak for the first time as head of the world's biggest retailer. what will he say? what do investors want to hear?
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in an all employee call today, the ceo of the gap announced that the company will raise the minimum hourly wage u.s. employees get to $9 this year and $10 next year. the move will cover all of its brands, and the ceo says it will benefit about 65,000 hourly employees. there is now an actual price tag attached to that massive data breach at target. $200 million and counting. that's what it is costing banks and other financial institutions according to the consumer bankers association and the credit union national association. the two groups also say that more than half of the 40 million compromised credit and accidede have now been replaced. the biggest retailer is preparing to give earnings on thursday. investors are hopeful for a better outlook from walmart's
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new ceo. courtney reagan has more. >> reporter: walmart will release earnings tomorrow morning, but wall street got a peek into its bah hum bug holiday quarter when the retailer warned its fourth quarter profit would be at or slightly below the low end of its previous forecast, leaving investors waiting to hear what new ceo doug mcmillan says about the company's outlook. while he wasn't yet overseeing the company during its holiday quarter he'll lead the earnings call on monday morning as investors wonder how walmart will deal with a difficult environment. >> gas prices are starting to head up a little bit. weather is impacting everybody in retail. and most of all, we just have a consumer at the low end that has been struggling for a number of years and doesn't seem to be getting really any benefits from any of these real improvements in the economy that we're seeing. >> reporter: while not everything seems to be working for walmart, the retailer has repeatedly touted its small format stores as a point of
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success, announcing plans to add up to 150 more of them this year. while walmart has traditionally grown by opening more stores, credit suisse analyst says walmart should buy family dollar. the research shows family dollar locations have the least overlap with walmart compared to other dollar stores, which would mean a lower risk of a deal being blocked by regulators. plus nearly a quarter of family dollar stores are in large urban markets, areas walmart has had a hard time breaking ground. financially, walmart could buy family dollar, but mkm partners patrick mckeever says some investors want to hear about a slowing of square footage growth so the retailer can return more cash to shareholders. while few analysts expect any dramatic announcements in walmart's earnings release, many are hoping mcmillan has something planned to make sales growth soon. for "nightly business report," i'm courtney reagan. >> that is "nightly business report" for us tonight. i'm susie gharib.
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thanks for joining us. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we'll hope to see you back here tomorrow night. >> "nightly business report" has been brought to you in part by -- >> the street koikt. founded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr. 
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tonight on "quest" -- thousands of them are sneaking through the brush statewide. they're wild boar, an invasive species with a long list of bad habits. find out what californna is doing to keep them from cutting a swath of destruction through our native flora and fauna. and stargazing isn't just for phd scientists with mountaintop telescopes. meet the bay area mmn who helped bring astronomy down to earth for the est of us. major funding for "quest" is provided by -- the national science foundation. the gordon and betty moore

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